Rent Vs. Buy in Los Angeles

If you don’t own a Los Angeles home, you’re missing out on one of the best tax shelter available. The U.S. tax code heavily favors home ownership.

ADVANTAGES OF HOME OWNERSHIP:
• Your annual mortgage interest payments are a FULL write off!
• In the early years of paying mortgage payments, you are paying mostly your interest.
The good news is, you are writing off all these interest payments. These amounts can be quite substantial!
• In addition, you can write off your annual property taxes.

The 1997 Tax Bill
The largest advantage of Los Angeles home ownership is the generous capital gains tax exemption when you sell it.
• The 1997 tax bill allows you to keep up to $250,000 of the profit without paying any capital gains tax.
• So if you buy your home for $150,000, and in fifteen years you sell it for $400,000, you can keep all of the profit ($250,000).
• Joint returns allow you to keep up to $500,000 of the profit tax-free.

What other investment is this attractive or advantageous?
If you buy stocks, you have to pay capital gains tax when you sell them. If you buy bonds, you have to pay taxes upon their maturity. If you invest in IRAs, you have to pay taxes on the funds when you begin drawing from the accounts.
On the other hand, home ownership allows you to keep $500,000 in profit, tax free (if you are married) and $250,000 if you are single!

The Road to Wealth
Michelle and Richard bought their first home for $150,000. They put 10% down payment on the home loan or $15,000. They sold it seven years later for $195,000. They rolled the profits (less selling expenses) into a new home, which they bought for $250,000.

Fifteen years later, they sold the house for $450,000. Their initial $15,000 investment is now worth $245,000! In this case, they combined powerful capital gains exemptions with the power of leverage – they used the bank’s money to finance their homes.

This simple example illustrates how wealth can easily be created by taking advantage of the U.S. tax code.

Are YOU still Renting?
Every payment you make to your landlord is depriving you of your future wealth! As your local Los Angeles real estate specialist, I am available to answer any questions you have about the tax benefits of home ownership.

Questions about Home Buying vs. Renting?
You can call me any time for advice at 323.493.4495 or simply email me at oh.jeneen@gmail.com
Here’s to your financial freedom!